Ukraine is the number one destination in Europe when it comes to IT outsourcing. Software development is the country’s most advanced and most popular industry and Ukrainian developers rank among the best in the world. Considering that around 85% of them have a very good command of English, communication within your global team will definitely not be a problem.
Also in terms of cost efficiency and time zone, Ukraine proves to be a top hiring destination: Salaries are quite low compared to other European countries and the time zone is very convenient for companies with international teams in Europe and North America.
When hiring workers in Ukraine, it is mandatory to provide a written employment contract which can either be concluded for a fixed or an indefinite period. In both cases, the agreement must be in Ukrainian.
In addition, Ukrainian labour law distinguishes between employment agreements (used in most cases) and employment contracts (use limited by law) which are more flexible and can contain additional provisions.
While the latter must include details about employment length, rights, duties, liability and termination, the only formal requirement when it comes to an employment agreement is the determination of a probation period.
Probation periods in Ukraine must not exceed three months. For unskilled workers, it is even shortened to one month.
Working Hours and Breaks
A normal working week in Ukraine is limited to 40 hours, corresponding to eight hours per day over five working days. When the working week comprises six days, the maximum number of working hours per day is seven. Special regulations apply to pregnant women who may demand a shorter working week.
After four hours of work, employees have the right to take an unpaid break which must not exceed two hours. Workdays preceeding national holidays are shortened by one hour.
Generally speaking, employers are not allowed to request overtime work from employees. However, there are certain exceptional circumstances where Ukrainian labour law allows overtime work. In these cases, overtime is to be paid at double rates. The same pay rate applies for work on rest days and on public holidays.
Overtime work must not to exceed four hours on two consecutive days and 120 hours per year. Pregnant women and employees under 18, among others, are not allowed to work overtime.
Employees in Ukraine usually get paid twice a month. The two payroll cycles are as follows:
- 15th to 20th of each month
- 31st to 7th of the following month
In no case should the period between payments be longer than 16 days. If the usual payment day falls on a public holiday or on a weekend, the payment is to be made the day before.
As of 2021, the minimum wage in Ukraine is UAH 6,000 per month.
Employees who are unable work due to sickness or temporary disability are entitled to sick pay. The employer covers the first five days of sick leave upon presentation of a medical certificate. After that, sick pay is covered by social security.
The amount of sick pay is calculated based on the last twelve months’ wages and the employee’s length of service:
- 50% – 0 to 3 years at the company
- 60% – 3 to 5 years at the company
- 70% – 5 to 8 years at the company
- 100% – more than 8 years at the company
If the employee has been working for the company for less than six months, the calculation is based on the minimum wage.
It is neither required nor common practice for employers in Ukraine to pay their employees a 13th salary.
Taxes and Social Security Contribution
Employees and employers in Ukraine are subject to the following tax and social security contribution rates:
18% corporate tax rate
20% VAT (standard rate)
18% income tax
1.5% military contribution
22% of employee’s salary (unified social contribution) capped at 15 times the minimum wage
0% of employee’s salary
Employees in Ukraine are entitled to a minimum of 24 days of paid leave per year, i. e. two days per month. Disabled workers and those over 55 receive three additional days. Employees under 18 get 31 paid vacation days. However, annual leave can only be claimed after the first six months of consecutive work.
Unpaid leave is limited to 15 days per year. Employers are obliged to grant unpaid leave in certain cases, e.g. honeymoon. For other circumstances such as the death of a family member, unpaid leave may be granted but is not compulsory.
Ukraine observes eleven public holidays.
Maternity Leave and Paternity Leave
Maternity leave in Ukraine is 126 calendar days – 70 before and 56 days after birth. It can be extended to 140 days, and in some cases even to 180 days. While on maternity leave, the employee receives her full wages which are paid by social security.
There is no paid paternity leave in Ukraine but fathers may take 14 days of unpaid leave.
Mothers and fathers are allowed to take additional parental leave until the child turns three. However, this leave is unpaid.
Additional Leave and Benefits
On top of the leave entitlements detailed above, employees in Ukraine enjoy the following benefits:
- up to 30 days of unpaid leave to care for a sick family member
- up to 10 days of marriage leave
- study leave depending on the length of the exam period
Furthermore, it is quite common for employers to provide their employees with private health insurance.
The employment may be terminated due to one of the following reasons:
- by default as specified in the contract
- staff reduction
- in case of liquidation
- in case of a proven violation of labour agreement, labour law or other
- voluntary termination of employment
- by mutual agreement
While the notice period for employees is two weeks, employers have to give two months’ notice when dismissing an employee. Pregnant women, women with children under three as well as employees close to retirement are protected from dismissal by law.
The final payment is to be made on the employee’s last working day and should consist of the employee’s final salary (prorated), a compensation for any unused annual leave and any outstanding bonus payments. It is common for employers to issue a severance payment equal to one month’s wages or more.
Hiring in Ukraine?
Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Ukraine? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.